Said to account for around 20% of GDP, Andorra’s banking sector has seen radical change over the past few years.
Historically, Andorra’s banks offered numbered accounts without shared names of record. Numbered bank accounts were especially popular for foreign residents, as it made Andorra an attractive place to park and earn income on money, away from the eyes of their government of residence.
In light of a changing world, and after briefly being listed on the OECD’s list of non-cooperative tax havens, Andorra has been moving towards a model of transparency with the global economy, while aiming to maintain privacy for its residents.
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Automatic Exchange of Information & Common Reporting Standard
Andorra signed on to the Declaration on Automatic Exchange of Information in Tax Matters in 2014, along with 100 other jurisdictions. The intention of this declaration is for signing jurisdictions to combat tax evasion and facilitate tax compliance by implementing the “Common Reporting Standard”.
The CRS requires jurisdictions to collect appropriate financial information from their banks and other financial institutions, and exchange this information with other jurisdictions, automatically.
How Are Residents Exposed to AEOI?
Andorra’s banking secrecy (or perhaps privacy is a better word), remains for resident accounts. Financial institutions are not required to share information about resident accounts to Andorran authorities.
Given the Automatic Exchange of Information is a reciprocal agreement, Andorra will receive information from other jurisdictions. Therefore residents should assume Andorran authorities will be aware of their accounts abroad.
This is positive news for residents of Andorra who declare income appropriately to the government, as it means their financial information from within the Principality should kept private.
Information is shared on the bank accounts of non-resident individuals and entities, consisting of:
- account number,
- taxpayer ID number,
- date of birth,
- income (interest, dividends, insurance income, etc),
- sale proceeds,
- account balances,
- for company accounts, ultimate beneficiary owners.
When Did Reporting Begin?
Andorran institutions began collecting information in 2017 and reporting began in 2018.
To stay up to date, keep an eye on this page.
In 2015, Banca Privada d’Andorra, the bank known locally as “BPA”, was accused of money laundering by the US Treasury Department.
The local opinion (that BPA was a sacrificial lamb) differs somewhat to the one that was told in major press around the world.
Whatever the truth is, this scandal combined with CRS has placed significant pressure on the Andorran banking system, with due diligence and KYC process often becoming difficult for individuals and companies.
Andorra’s Banking Secrecy: Going the Way of the World
Despite a financial secrecy score of 66/100 (only 10 points below that of Switzerland), Andorra ranks 105 on the Financial Secrecy Index. This is due to the countries’ small size and impact on the global economy.
Andorra’s government and financial industry is moving towards a model of transparency without greed. Taxation in Andorra remains low and fair, but resident and non-resident individuals and entities must be compliant both within the boundaries of the country and abroad.
Want to learn more? Take a read of our article on Andorra’s Banking System.